Knockout Otx1 mice present a microcephalic phenotype mainly due to reduced deep neocortical layers and spontaneous recurrent seizures. We investigated the excitable properties of layer V pyramidal neurons in neocortical slices prepared from Otx1-/- mice and age-matched controls. The qualitative firing properties of the neurons of Otx1-/- mice were identical to those found in wild-type controls, but the proportion of intrinsically bursting (IB) neurons was significantly smaller. This is in line with the lack of the Otx1 gene contribution to the generation and differentiation of neurons destined for the deep neocortical layers, in which IB neurons are located selectively in wild-type rodents. The pyramidal neurons recorded in Otx1-/- mice responded to near-threshold electrical stimulation of the underlying white matter, with aberrant polysynaptic excitatory potentials often leading to late action potential generation. When the strength of the stimulus was increased, the great majority of the Otx1-/- neurons (78%) responded with a prominent biphasic inhibitory postsynaptic potential that was significantly larger than that observed in the wild-type mice, and was often followed by complex postinhibitory depolarizing events. Both late excitatory postsynaptic potentials and postinhibitory excitation were selectively suppressed by NMDA receptor antagonists, but not by AMPA antagonists. We conclude that the cortical abnormalities of Otx1-/- neocortex due to a selective loss of large projecting neurons lead to a complex rearrangement of local circuitry, which is characterized by an excess of N-methyl-d-aspartate-mediated polysynaptic excitation that is counteracted by GABA-mediated inhibition in only a limited range of stimulus intensity. Prominent postsynaptic inhibitory potentials may also act as a further pro-epileptogenic event by synchronizing abnormal excitatory potentials.